Rethinking Economics, Statistical System and Welfare

The paper picks up what can be called as a thread of discontentment in conventional macroeconomics through a brief review of literature, carefully chosen to bring home the importance of micro, to justify that it can give a realistic framework of analysis of the economy. To support research for validation of alternative theories challenging the rational approach, deeply rooted in the general equilibrium theory, we need empirical evidence linking the micro with the macro. The idea is to seek conformance of these theories based on ground realities and to consider institutions and governance as important components of this analysis. The existing statistical system in India needs to be reoriented following the System of National Accounts 2008 on microdata to capture distributional characteristics of macroaggregates. There is a new direction in applied econometrics based on the idea of stochastic equilibrium which is testable using microdata. The paper touches upon this idea citing a single work.